Why Austerity Is 'A Nonsense': Mark Blyth (VIDEO)

The term "austerity" has become a popular and concise way of describing the various methods of economic belt-tightening being employed throughout Europe and much of the United States. But austerity has also been used to justify sweeping cuts in crucial social services that unduly burden lower-income earners, according to international political economist Mark Blyth, who appears in a new video produced by Brown University's Watson Institute for International Studies.

Explaining the world as a series "balance sheets," Blyth details the debt-fueled boom that effected both corporations and consumers. The rescue of "too big too fail" institutions put huge burdens national economies, Blyth says, which has lead to a virtually simultaneous series of tough political choices for world leaders. "Governments have to increase taxes (difficult) or cut services (easier)," Blyth notes.

But the cuts contained in world austerity measures may affect some more than others. Blyth suggests these cutbacks are likely to increase the gap between rich and poor:

"Where does this common sense virtue of austerity leave us it leaves us? It leaves us in a cycle, where those at the bottom end of the of the income distribution pay for those at the top with the same stagnant and skewed incomes that now buy less in a more unequal and unstable economy. There's a term for this: class politics. And it usually ends badly.

Blyth is working on a book tentatively titled "Austerity: The History of a Dangerous Idea."

WATCH the video:

Comments

[iLoveOldNY]

08:50 PM on 09/29/2010

Excellent video for those who are trying to understand the scope of this financial crisis.

Nobel prize winning Krugman explains why Obama will not create jobs ignoring basic job creation mechanics.

[iLoveOldNY]

08:51 PM on 09/29/2010

Sorry! Forgot the link!

http://www.youtube.com/watch?v=QfBC9Ui9oNE

[Stuart Goddard]

08:32 AM on 09/29/2010

Why the hell sould the average joe suffer the effects of austerity mesures when it is the financial institutions that have got us in this mess. If we do not change the way we live and do business and start again we will be looking at years of misery. Do you here the rumble tha is the xhit coming down the hill again hitting the already worse off in our society.
I wonder where the saying came from same xhit different day.

[JScott]

02:42 AM on 09/29/2010

But of course this won't get media coverage on the corporate media, it doesn't fit into their ideology.

[iLoveOldNY]

06:33 PM on 09/28/2010

This is why liberals and independents are p!ssed at Obama.

Any major economist worth his salt is saying the same thing, and Obama decides to go the republican route.

Maybe it is time for the POTUS to buck up.

[Jennifer Hill]

12:19 PM on 09/28/2010

Given the news about the expanding inequality gap any plans for austerity should be in the trash can - He says it well ....

"Where does this common sense virtue of austerity leave us it leaves us? It leaves us in a cycle, where those at the bottom end of the of the income distribution pay for those at the top with the same stagnant and skewed incomes that now buy less in a more unequal and unstable economy. There's a term for this: class politics. And it usually ends badly.

[Bert Juneau]

11:45 AM on 09/28/2010

Societies that acquire assets accrue military and economic power, those that acquire debts lose economic and military power. It's that simple.

[statementOfIncensed]

02:12 AM on 09/29/2010

replace "acquire assets" with "develop productive capacity", and you have a true statement.

[Birdman372537]

08:42 AM on 09/28/2010

Level the playing field for all Americans. Pass single-payer health care. It is the one piece of legislation that would give security to EVERYONE in our great country, regardless of their income strata. It's fair, it's moral, it's doable. Get it done.

[baldmelon]

06:30 AM on 09/28/2010

the arguement that poor people don't pay taxes is a lie. our salaries have stayed the same or dropped, our homes are worth less, banks aren't lending, food and other esentials continue to raise in cost but now we and only we are supposed to tighten our belts. make no mistake, this is class warfare.

[FogBelter]

09:49 PM on 09/27/2010

Very good.

I would add that the 800lb gorilla in the room is cause and effect. In order to get the economy back on track there needs to be social stability, a factor left out of the equation. As austerity kicks in the society will become more unstable. For instance, you cut financing for infrastructure and instead of getting a State of the Art Smart Grid you get the aged electrical grid we have now with less people maintaining it because of austerity. So, you get more power outages. Big ones, like we had in the North East of the United States a few years ago. You cut the electricity you interrupt electronics based commerce. The durations of the outages become longer and the frequency of outages are more regular. It is a Third World model, in an advanced economy that can't afford systems interruptions. So, what happens? Less commerce, less consumer confidence, more stress on the economy that requires more austerity measures. A downward spiral. Anyway, that's the way I see it. Let's see how it plays out because austerity is on the way.

[ifolkinrock]

09:05 PM on 09/27/2010

This makes me think that the initial reaction to the bursting housing bubble - relentlessly hammering people in the bottom 40% who took out subprime loans - was maybe more strategic than knee-jerk. If you get these people to believe that it was all their fault and nobody else's, then brutal austerity measures will be easier to pass. I saw the same thing when the steel industry folded. Tons of working class folks still believe that it was 100% the fault of the unions, and that made union busting in other sectors easier.

[svendthrift]

08:17 PM on 09/27/2010

We need to move away from the private, debt-based monetary system and towards a public, equity-based monetary system. The debt is owned by the top and paid by all. It is insane.

[Zombie Slayer]

07:02 PM on 09/27/2010

Government non-austerity is either higher taxes or higher inflation. The poor and middle class lose either way.

[svendthrift]

08:40 PM on 09/27/2010

They could print the money they need instead of borrowing it. As was done in colonial Pennsylvania.

[OSCPJ]

08:47 PM on 09/27/2010

Its being done today as we speak.  Look up "Monetize the debt", "Quantitative Easing", look at the yield on UST bonds and ask why anyone would purchase them, then ask who the "private bidders" are. 

The govt has to socialize the losses of the banks and make the banks look whole.  Mark to Market did this, but the banks can't hold these forever.

[nogimmicks]

06:56 PM on 09/27/2010

Austerity and stability is bad for the bankers. They rule via ever increasing debt and cycles of boom and bust. But I would not rush make a perverted argument that what is bad for the bankers is bad for everybody else.

[LehiBoy]

06:45 PM on 09/27/2010

Very well done!! Clearly the answer is to allow the tax cuts on the upper income earners expire (and even some on those making less than $250,000). This film pokes a gapping hole into the Republican's "Pledge".

[OSCPJ]

08:49 PM on 09/27/2010

Exactly what did the Democrats pledge?  It's nice to hear what Harry, Nancy and Barrack want to criticize and point fingers.  Do THEY know they are in charge?

What is their plan?  To blame Bush and Republicans?  How does that work?